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TMI Blog2024 (10) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 (9) TMI 317 - SUPREME COURT ] is concerned, that relates to the recovery of Sales Tax and VAT. The question raised by the appellant therein is whether Section 53 of the Insolvency and Bankruptcy Code, 2016 overrides Section 48 of the Gujarat Vat Act. After considering Section 48 of GVAT, the Apex Court has held that the State is also a secured creditor as defined under Section 3(30) of IBC. The Debt Recovery Tribunal has not committed any error while dismissing the objections raised by M/s Maya Spinners Ltd. - Petition dismissed. - HON'BLE SHRI JUSTICE VIVEK RUSIA And HON'BLE SHRI JUSTICE BINOD KUMAR DWIVEDI Shri Ashish Gupta - Advocate for the petitioner. Shri Abhinav Dhanodkar - Advocate for the respondent No.1. Shri Prasanna Prasad - Advocate for the respondent No.2. ORDER Per : Justice Vivek Rusia Facts of Writ Petition No.2218 of 2006 02. Union of India through Commissioner, Customs and Central Excise, Indore has filed Writ Petition No.2218 of 2006 challenging the tender notice published on 27.10.2005 by respondent No.1, order of attachment for recovery of dues by way of attachment of properties of M/s Kowa Spinning Ltd. 2.1 M/s Kowa Spinning Ltd., Dhamnod, Distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing a tender notice. Hence, the petitioner Central Excise Department approached this Court challenging the action of respondent No.1 claiming the first right of Customs and Central Excise Department to recover the dues from the Mortgaged Property . Vide order dated 14.11.2007, this Court directed properties of respondent Nos.2 to 7 shall not be put to auction for recovery of the dues by MPSIDC and further directed to list the matter for final disposal within one year, but till today, the petition has not been heard finally and stay order is continuing. FACTS OF Writ Petition No. 2241 of 2014 03. The Central Excise Department also filed another Writ Petition No.2241 of 2014 challenging the e-auction notice dated 30.01.2014 issued by the Recovery Officer, Debt Recovery Tribunal, Jabalpur to recover the debt dues of Rs.14,78,42,694/- against M/s Maya Spinners Ltd. 3.1 Apprehension of the petitioner is that respondent No.1 may auction Mortgaged Property at a much lower price than the actual price hence it would be difficult to recover the Government revenue. On 17.11.2015 notices were issued to the respondents, but no interim relief was granted and the writ petition was tagged with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or for that matter, any other dues. 06. Shri Abhinav Dhanodkar, learned counsel appearing for the Bank of Baroda has placed reliance on the judgment passed by the Apex Court in the case of Punjab National Bank V/s Union of India and others, (2022) 7 Supreme Court Cases 260, in which it is held that the dues of secured creditor i.e. bank will have priority over the other dues of Central Excise Department, as even after insertion of Section 11-E in the Central Excise Act, 1944, the provisions contained in the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act, 1944. Shri Dhanodkar further submits that this judgment is directly on the point of involved in the present petitions. 07. Mr Nikhil Pandey learned counsel appearing for the MPSIDC has placed reliance on a judgment passed in the case of Industrial Development Bank of India V/s Superintendent of Central Excise and Customs and others, (2023) 10 Supreme Court Cases 107, in which also the Apex Court has held that the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529-A of the 1956 Act, therefore, in view of the above, all these writ pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, where the land, building, plant, machinery, etc. have been mortgaged/hypothecated to a secured creditor, having regard to the provisions contained in Sections 2(1)(zc) to (zf) of the SARFAESI Act, 2002, read with provisions contained in Section 13 of the SARFAESI Act, 2002, the Secured Creditor will have a first charge on the secured assets. Moreover, Section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act, shall have overriding effect on all other laws. It is further pertinent to note that even the provisions contained in Section 11-E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002. 51. Thus, as has been authoritatively established by the aforementioned cases in general, and Union of India v. SICOM Ltd.7 in particular, the provisions contained in the SARFAESI Act, 2002, even after insertion of Section 11-E in the Central Excise Act, 1944 w.e.f. 8-4-2011, will have an overriding effect on the provisions of the 1944 Act. 52. Moreover, the submission that the validity of the confiscation order cannot be called into question merely on account of the appellant being a secured creditor is mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 36 37 of the same are reproduced below: 35. We have also examined Sections 61, 72 and 142 of the Customs Act 32 to consider the question of whether the Customs Act confers and creates statutory first charge on the Customs dues, and are of the opinion that the sections do not incorporate a statutory first charge to override the general law, as per the dictum in Dena Bank22. The provisions of the land revenue enactment applicable in the present case have not been relied upon by the respondents, in which event, a legal issue relating to conflict of laws would have arisen and required an answer. The provisions in the Customs Act do not, in any manner, negate or override the statutory preference in terms of Section 529-A of the Companies Act, which treats the secured creditors and the workmen's dues 33 as overriding preferential creditors; and the government dues limited to debts due and payable in the twelve months next before the relevant date, which are to be treated as preferential payments under Section 530 of the Companies Act, but are ranked below overriding preferential payments and have to be paid after the payment has been made in terms of Sections 529 and 529-A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaratory, and does not lay down a new dictum or confer any new right as far as the present case is concerned. However, the enactment of Section 142-A of the Customs Act does confer or create a first charge on the dues payable under the Customs Act, notwithstanding 9 provisions under any Central Act, but not in cases covered under Section 529-A of the Companies Act, RDDBFI Act, SARFAESI Act and IBC. Section 142-A of the Customs Act, post its enactment, would dilute the impact of Section 530 of the Companies Act, which had restricted preferential treatment to government taxes due and payable limited to twelve months before the relevant date , without preferential right for taxes that had become due and payable in the earlier period. 11. So far as the judgment of the State Tax Officer (supra) is concerned, that relates to the recovery of Sales Tax and VAT. The question raised by the appellant therein is whether Section 53 of the Insolvency and Bankruptcy Code, 2016 (in short IBC ) overrides Section 48 of the Gujarat Vat Act. After considering Section 48 of GVAT, the Apex Court has held that the State is also a secured creditor as defined under Section 3(30) of IBC. Therefore, this j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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